Finkelstein earned a Bcomm degree from Concordia University, an MSc degree from the London School of Economics, and a PhD from Columbia University. He is a Steven Ross Professor of Management at Dartmouth’s Tuck School of Business. His other published works include Dynamic Capabilities: Understanding Strategic Change in Organizations (with C. Helfat, W. Mitchell, M. Peteraf, H. Singh, D. Teece, and S. Winter) and Breakout Strategy: Meeting the Challenge of Double-Digit Growth (with C. Harvey and T. Lawton).
Initially, Finkelstein really didn’t understand how and why so many business leaders fall so far so fast. “How can so many people be so disastrously wrong? What can possibly account for the scores of business failures we see each year, in different industries, and even in different countries? And how can we prevent this sort of thing from happening again?” Finkelstein devoted more than six years of research to answering questions such as these. “My goal was not only to understand why businesses break down and fail, but to focus on the people behind these failures; not only to understand how to avoid these disasters, but to anticipate the early warning signs of failure. Ultimately, I wanted to move beyond ad hoc explanations of failure on a case-by-case basis and expose the roots of these breakdowns in a definitive way.” Whereas Peters and Waterman set out in search of excellence, Finkelstein and his research associates set out in search of failure...and achieved that objective. What they found and what they learned are now offered in this book.
He organizes his material within three parts. Part I, Great Corporate Mistakes, focuses on four different business challenges–creating successful new ventures, managing mergers and acquisitions, coping with innovation and change, and developing winning strategies in the face of new competitive pressures. In Part II, he identifies the underlying causes of failure evident even across different types of corporate mistakes. In this Part, Finkelstein offers a deeper analysis of the common patterns of behavior that executives in failing companies exhibited. In Part III, Finkelstein shifts his (and his reader’s) attention to explicitly developing two critical ideas that have stayed in the background, to this point. “First, can we use the findings of our study as an early warning system? Can our results tell us how to predict when trouble is coming, if not already developing? And second, how do successful executives create organizations that can learn from, and better yet avoid disaster? What can we learn from them?”
Finkelstein lists and then evaluates seven theories that are frequently offered to explain executive failure. (For example, “The Executives were stupid.”) Next, he explains that before his research began, there were no “crystal-clear hypotheses” with regard to patterns of failure. Then he guides his reader through a series of mini case studies that reveal both executive mistakes and what can be learned from each of them. Of special interest to many readers is the set of early warning signs that the research uncovered. They may not prevent making mistakes but recognition of them in a timely manner can indeed reduce the potential damage. Also of special interest are the “early-warning signs” by which to recognize, diagnose, and then correct business mistakes as they are happening.
It may not have been Finkelstein’s initial purpose but his discovery during his search for an explanation of executive failure is a wealth of information that can help smart executives to succeed. There is so much more involved than merely inverting a serious of mistakes (e.g. cooking the books) and then assuming that (Eureka!) a recipe for certain success has emerged. This is a book about human failure. Its value is for each reader to determine.
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